Dismissed

Veerappa S/O Siddalingappa Hatti v. Rajashekhar S/O Gadigeppa Shettar

Karnataka HC9 Dec 2020CRL.A/100240/2015

Case brief

AI extract

What is this about?

In an appeal challenging an acquittal under Section 138 of the Negotiable Instruments Act, the High Court of Karnataka upheld the trial court's judgment. The court found serious doubts about the transaction due to discrepancies in party accounts, failure to examine a material witness (driver), and inconsistencies regarding goods transport capacity. Consequently, the burden of proof remained on the

What did the court decide?

Criminal Appeal No.100240/2015 dismissed; impugned judgment of the trial court acquitting the respondent is upheld.

Veerappa S/O Siddalingappa Hatti Vs Rajashekhar S/O… — Cheque Dishonour | Karnataka HC (2020)

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IN THE HIGH COURT OF KARNATAKA

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DHARWAD BENCH

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DATED THIS THE 9^TH DAY OF DECEMBER 2020

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BEFORE

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THE HON’BLE MR.JUSTICE RAVI V.HOSMANI

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CRIMINAL APPEAL No.100240/2015

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BETWEEN:

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VEERAPPA S/O SIDDALINGAPPA HATTI, AGE: 56 YEARS, OCC: AGRICULTURE AND BUSINESS, R/O YALMALLI ONI, MELINPETH, HAVERI-581110.

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... APPELLANT

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(BY SRI N.P.VIVEKMEHTA, ADVOCATE)

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AND

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RAJASHEKHAR S/O GADIGEPPA SHETTAR, AGE: 60 YEARS, OCC: BUSINESS, R/O BANKAPUR, TQ: SHIGGAON, DIST: HAVERI.

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... RESPONDENT (BY SRI SUNIL S.DESAI, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT AND ORDER OF THE ADDL.CIVIL JUDGE AND J.M.F.C., HAVERI DATED 31.08.2015 PASSED IN C.C.NO.22/2010 AND CONVICT THE RESPONDENT FOR OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT.

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THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY, THE COURT, DELIVERED THE FOLLOWING:

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JUDGMENT

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Challenging the judgment dated 31.08.2015 passed by Addl. Civil Judge and J.M.F.C., Haveri in C.C.No.22/2010, acquitting accused for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I.Act’), present appeal is filed.

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Brief facts giving rise to this appeal are that a complaint came to be filed on 22.08.2009 stating that complainant and accused were doing grocery shop business. The complainant was wholesaler and accused was retailer. Since ten to twelve years, accused was purchasing groceries from complainant and there was friendship between them. As such on 03.03.2009, accused placed an order for supply of groceries worth Rs.50,000/and requested them to be dispatched to complainant. In pursuance of request, complainant dispatched said goods though B.M.Ullagaddi, driver of goods vehicle bearing

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registration No.KA-27/8381. Despite delivery of goods, accused did not make payment of said sum. On demand for payment, accused issued a cheque dated 25.05.2009 bearing No.500059 drawn on Canara Bank, Bankapur. The same was presented for collection on 25.05.2009. However, it was returned on 27.06.2009 with an endorsement “no such account”. The intimation was received by complainant on 03.07.2009. Thereafter complainant approached accused by going to his town on 04.07.2009 and requested payment. However, accused refused to make payment. Thereafter complainant got issued statutory notice dated 22.07.2009 and sent it through RPAD. The same was received by accused on 27.07.2009. Accused issued a reply dated 10.08.2009, but did not make any payment. Hence, complaint was filed.

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After recording sworn statement of complainant and taking cognizance, trial court issued summons to accused. On appearance, accused denied charges and sought trial. In support of complaint, complainant got

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himself examined as PW1 and another witness as PW2 and got marked Exhibits P1 to P22. Thereafter incriminating material was explained to accused, who denied the same and sought permission to lead evidence. His statement under Section 313 was recorded. Thereafter accused got himself examined as DW1 and got marked Exhibits D1 to D10.

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On consideration of the same, trial Court

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framed following points for its consideration.

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1. Whether the complainant proves that towards the legally enforceable debt, the accused has issued the cheque for Rs.50,000/bearing No.500059, dtd.25.05.2009 drawn on Canara Bank, Bankapur Branch and when the complainant presented the cheque for encashment, the said cheque was dishonored for the reason “no such account” and accused has failed to comply with the demand made in the legal notice dtd:22.07.2009 and thereby committed the offence punishable U/Sec. 138 of Negotiable Instruments Act?

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2. What order or sentence?

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After answering point no.1 in the negative, trial court proceeded to pass the impugned order acquitting accused. Challenging acquittal, complainant is in appeal.

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Learned counsel Sri N.P.Vivekmehta submitted that complainant examined himself as PW1 and reiterated complaint averments. He also produced cheque as Ex.P1, bank challan as Ex.P2, bank endorsement as Ex.P3 and P4, statutory notice as Ex.P5, UCP acknowledgment as Ex.P6 and P7 and the RPAD acknowledgment as Ex.P8. Complainant had also produced certified copy of receipt book as Ex.P9, photograph of accused’s shop as Ex.P10 with CD (compact disc) as Ex.P11, photographs of accused in his shop as Exs.P12 to P16, VAT registration of complainant’s business as Ex.P17, the annual VAT returns statement for period from 01.04.2008 to 31.03.2009 as Exs.P18 and P19 and acknowledgments for having filed income tax returns as Exs.P21 and P22. It was submitted from the above, complainant proved necessary ingredients

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for constituting offence under Section 138 of the N.I. Act, namely:

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a) That cheque was issued;

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b) The same was presented;

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c) It was dishonoured, on presentation;

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d) A notice, in terms of provisions of NI Act was served on the person, to be made liable;

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e) Despite service of notice, neither any payment was made nor any other obligations, if any, were complied within 15 days from date of receipt of notice.

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Complainant also proved his business and financial capacity. Despite substantial evidence placed on record by complainant, trial Court passed impugned judgment acquitting accused, on perverse reasons, which led to miscarriage of justice calling for interference by this Court.

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Assailing reasons assigned by trial Court, learned counsel submitted that when it was the complainant’s case that cheque was received by him from accused, mere change in ink regarding signature, amount

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in words and figures and name and date of cheque, was not a material omission or contradiction. It was for accused to have got it referred to handwriting expert to establish that such alteration was unauthorized. The trial court also held that failure to examine the transporter namely B.M.Ullagaddi was fatal. But, as accused admitted his signature on cheque, presumption in law was available to complainant. Hence, said reason was unsustainable.

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Assailing the reasons assigned by trial Court, learned counsel submitted that trail Court committed an error in entertaining doubt on the ground that cheque was issued in the name of M/s. Shree Veerabhadhreshwar Tea Depot, a firm, but complaint was filed in individual capacity by complainant. Trial Court further erred in observing that evidence of PW-2, Manager of drawee bank, was not useful on ground that his evidence did not rule out possibility of accused issuing cheque after closing the account.

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Even the reason that a presumption would be available when instrument is admitted, but, in this case, it was disputed was illegal. Accused admitted his signature on the cheque and the cheque was in possession of complainant. Therefore presumption ought to have been availed to complainant as per the law laid down by Hon’ble Supreme Court in RANGAPPA VS. SRI MOHAN reported in (2010) 11 SCC 441 . Trial Court has further held that complainant failed to prove the transaction on ground of non-examination of driver of goods vehicle which transported goods. However, as presumption was available, complainant was not required to prove the transaction and subsistence of debt, to the hilt. It would suffice to merely prove that a cheque issued by accused was returned dishonored upon presentation and accused has failed to repay amount on a demand made for repayment, after dishonor of cheque.

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Trial Court further erred in drawing adverse inference against complainant for failure to produce books

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of accounts on the ground that there were gaps in dates in the receipts produced as Ex.P.9. In view of presumption available, these facts were not required to be proved by complainant. Learned counsel further submitted that though accused contended that cheque in question was issued to Shrinidhi Finance, Haveri against a loan taken from it, by accused during 1997-1998, he failed to substantiate such claim. Under such circumstances, trial Court committed grave error in finding that evidence of PW-2 supported contention of accused to this effect.

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Learned counsel further submitted that trial Court committed grave error in expressing doubt about financial capacity of complainant despite complainant placing on record his Income Tax acknowledgments, VAT registration etc. Despite such clear evidence, conclusion doubting financial capacity of complainant was perverse. With regard to discrepancy noted by trial Court in the ink on the writings on cheque, learned counsel submitted that complainant has deposed that cheque was received by him

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from accused and writings thereon were not by

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complainant. Despite the same, trial Court placed burden of explaining discrepancy on complainant and thereby committed an error.

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It was lastly submitted by learned counsel that unless accused proved that complainant was not in lawful custody of cheque and had taken recourse to law, if it were otherwise, trial Court was not justified in doubting complainant’s case and acquitting accused on that count.

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On the other hand, Sri. Sunil Desai, learned counsel for accused submitted that there are several material discrepancies and omissions in the case of complainant and accused had successfully rebutted the presumption available to complainant, by elicitation of admissions from the complainant examined as PW-1. Learned counsel further submitted that accused had also led defence evidence which clearly substantiated the defence of accused. Referring to admission of PW-1, that entries of sales were made in sales register everyday,

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learned counsel submitted that it is complainant’s case that there was business relation between complainant and accused and that he had maintained books of accounts. Therefore, omission to produce books of accounts is a material omission and trial Court has rightly held said aspect in favour of accused. This also created a doubt whether Ex. P.9 was created for the purposes of this case. Further, complainant admitted that obtaining signature of recipient of goods on credit bill is very much necessary. But in this case he obtained signature of driver of goods vehicle only and even said driver is also not examined. On these grounds, accused substantiated doubt about credit bill at Ex.P.9, which was a material document for complainant to prove the transaction.

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Insofar as the driver of goods vehicle, learned counsel submitted that complainant stated that he did not know Sri. B.M. Ullagaddi, driver of the goods vehicle and denied that he was his relative. He stated that he did not know his place of residence, despite naming him as one of

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witnesses in the complaint! In fact, his response to a suggestion that said B.M. Ullagaddi is examined on his behalf in C.C.Nos.226/2006, 1019/2008 and 256/2008, complainant says that he does not remember. Failure to give clear answer about said suggestion invites drawing of adverse inference, if not disbelieving the witness for failure to give truthful answers.

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It was also elicited from PW-1 that he did not

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have any records to show that accused had placed order for supply of goods by telephone and that he had not asked the driver for the trip sheet. Even said fact exposed doubt about claim of complainant that goods were delivered to accused and that accused had incurred debt towards supply of goods.

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Learned counsel further referred to suggestions made to PW-1 regarding Srinidhi Finance, which he denied. It was suggested to him that Raju Navanakki and Pai were partners in the said finance company. Raju Navanakki was very well known to complainant and that

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after finance company went bankrupt, blank cheque given by accused to Srinidhi Finance was made over by Raju Navanakki to complainant to extract money from accused. The suggestion was denied by complainant.

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It was further elicited from complainant that a total of 24 Quintals and 75 Kgs of groceries were dispatched to accused in one mini lorry and he had written the name of driver and vehicle number on receipt and took signature of driver. Learned counsel submitted that B-register extract of goods vehicle, secured from RTO, reveals that the vehicle was registered laden weight is 1060 Kgs. 485 is unladen, and the vehicle could carry only about 500 Kgs per trip, which contradicts the demand of complainant that goods were sent to dispatch to accused in one trip.

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Learned counsel further submitted that initial in the date column of cheque reveals ‘19….’ and not ‘20….’.

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Further on the cheque it is mentioned as Canara Bank, Dharwad District, which would be doubtful as

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Bankapur was included in Haveri District in the year 2001 itself thereby casting serious doubt over complaint’s case.

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In support of his contention learned counsel relied upon the following citations.

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1. Ishwar Singh vs. State of Uttar Pradesh , reported in AIR 1976 SC 2423 .

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1. Habeeb Mohammad vs. State of Hyderabad , reported in AIR 1954 SC 51 .

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1. Manjit Singh and another vs. State of Punjab and another , reported in 2013(12) SCC 746 and

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1. For the proposition regarding rebuttal of presumption on judgment passed by this Court on 11.11.2020 in Crl.A.No. 2784/2012 .

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Heard learned counsel for the parties, perused

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impugned judgment and the records.

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From the evidence of PW1 it emerges that PW.1 has reiterated the entire complaint averments. He has also produced documents to support his contentions that the ingredients for constituting offence under Section 138 of NI Act are substantiated. The complainant has stated that accused had booked the goods to be supplied by making a telephonic call and that the goods were dispatched through a goods vehicle by taking acknowledgment from driver of goods vehicle. In his cross-examination, PW.1 admitted that he does not have any record of telephonic call made by accused. He admits that he had not taken trip sheet from driver of goods vehicle. He admits that he maintained purchase and sales registers of his business. He also admits that in case of credit sales/credit purchase, signature of purchaser is required to be taken on credit bill. He admits that goods were not supplied to the shop of accused but, were handed over to B.M.Ullagaddi driver of goods vehicle bearing registration No. KA-27/8381. It was suggested to PW.1 that B.M.Ullagaddi was his relative, which is denied.

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On a suggestion that B.M.Ullagaddi was examined by him in other cases namely CC No.226/2006, CC No.1019/08 and CC No.256/08, PW.1 says he does not remember. To a question in how many cases under Section 138 of NI Act were filed by him, PW-1 said that the counsel himself would know, as it was he who was his counsel, in those cases.

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PW.1 admitted that he conducts his business on all days except Sundays and sales are entered in bill books and ledgers. He admits that there were no sales between 29.01.2009 and 16.02.2009; between 16.02.2009 and 26.02.2009; between 16.02.2009 and 26.02.2009; and also between 26.02.2009 and 03.03.2009. It has been stated by PW.1 that accused came to complainant’s shop and handed over the cheque-Ex.P1 to him in his shop. At that time his wife and daughter were present. He further admits that cheque was written when he received it and he only checked the amount and name. PW-1 admits suggestion that he knew accused was

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authorisation holder for retail vending of Public Distributing System, Kerosene. Likewise, PW.1 also admitted that total quantity of grocery dispatched were 24 quintals 75 kgs and admits that they were sent in a mini vehicle.

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The Manager of Canara Bank is examined as PW.2. Ex.P.1 is a cheque drawn on Canara Bank. In his examination in chief, PW.2 identified the signature of accused on Ex.P1. But, during cross examination, he admits that no documents were available regarding account of accused in the Bank. He explains that since account of accused was closed prior to 2009, no records were available. It is elicited from PW.2 that according to him account of accused was closed more than 7 years prior. The witness further stated that usually at the time of closure of account, if there are any unused cheques available with account holder an endorsement is made. Otherwise, an indemnity will be taken from account holder regarding unpaid cheques.

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In this case, accused has also led his evidence by examining himself as DW.1. In his examination in chief he stated that he did not make any call to complainant requesting supply of goods on 03.03.2009, through vehicle No.KA-27/8381 driven by B.M.Ullagaddi. He stated that complainant’s case is totally false. He stated that as there was no transaction between accused and complainant, there was no occasion for him to issue any cheque to complainant. The accused further states that during the year 1997-98, he had taken a loan of Rs.50,000/- from Srinidhi Finance, Haveri and had given the cheque in question as security for such loan. Thereafter, he had repaid the loan. When he went to take his cheque back, he found that finance company was closed. Raju Navanakki of said Finance Company, informed him that Finance Company was closed and that his cheque was not misused. Thereafter, accused closed his account in Canara Bank, in 2001. DW.1 has further stated that complainant joining hands with Raju

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Navanakki had filed instant false complaint. The accused also got marked letter by commercial tax Department to complainant as Ex.D; his Annual VAT statements for the year 01.04.2008 to 31.03.2009 and form VAT-100 from 01.04.2008 to 30.06.2008, 01.01.2009 to 31.03.2009, 01.07.2008 to 30.09.2008 as Ex.D2 to D5; respectively office copy of his reply to the statutory notice as Ex.D6, RPAD acknowledgement as Ex.D7; the postal receipt and UCB acknowledgment as Ex.D8 and D9 respectively. The ‘B’ Register extract of goods vehicle bearing No.KA27/8381 issued by RTO, Haveri was also marked as Ex.D.10.

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On careful consideration, it is admitted by accused that signature on cheque-Ex.P1 is his. From cross-examination of PW.1, accused substantiated his defence that there was no transaction between accused and complainant and also probabilised issuances of cheque of Srinidhi Finance. The answer to suggestion that B.M.Ullagaddi, driver of goods vehicle was known to

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complainant and was examined in three other cases, complainant instead of giving a truthful answer says that he does not remember. The reason for not denying said fact, probabilised that B.M.Ullagaddi was known to complainant and examined in other cases. The fact that the counsel for accused was earlier counsel for PW.1 also supports this conclusion. Therefore, non-examination of driver B.M.Ullagaddi as a witness by complainant in this case would be one of the circumstances to be considered. Admittedly, credit bill-Ex.P9 generated by complainant does not bear signature of recipient of goods but bears signature of carrier of goods. Accused denied placing any order for supply of goods with complainant. He denied receiving any goods from transporter. There is also an admission by complainant that he does not have records to prove telephonic order placed by accused, and the trip sheet of goods vehicle is not produced. There is failure of complainant to produce books of accounts stated to be maintained in regular course of his business. All these cast a serious doubt about transaction. Both in complaint

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and in his cross examination in chief, complainant stated that goods were supplied through goods vehicle bearing No.KA-27/8381. After production of ‘B’ register extract in evidence of DW.1, there is suggestion by complainant to DW.1 that goods were supplied in ‘five trips’. The reason for improvisation appears to be obvious. The un-laden weight of vehicle is 485 Kgs and laden weight is 1060Kgs i.e carrying capacity is only 5 Quintals per trip(!). Total quantity of goods mentioned in Ex.P.9 was more than 24 Quintals, only one credit bill generated and no delivery note or trip sheet placed on record. The initial version of complainant that he maintains books of account is also sought to be improved upon during cross examination of DW-1. This circumstance gives rise to serious doubt about complainant’s case.

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It was also contended that when accused admitted Ex.P1-cheque was given as security for obtaining loan from Srinidhi Finance, Haveri operated by Raju Navanakki and Pai, failure of accused to examine Raju

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Navanakki or place any other cogent evidence to prove the same ought to have invited adverse inference. But I am of the view that as accused also suggested to PW-1complainant that Raju Navanakki was his relative and after closure of finance business, they had colluded and file this complaint, there is some explanation and non examination of Raju Navanakki cannot be viewed as a circumstance against the accused. More over, accused has rebutted the presumption available to complainant by other cogent evidence. Hence, burden shifts on the complainant not only to explain the doubt established by accused but to establish his case beyond reasonable doubt.

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Yet another circumstance which requires to be taken note of is that the complainant had mentioned Sri.B.M.Ullagaddi as one of the witnesses to the complaint, but failed to examine him. The Hon’ble Supreme Court in its decisions cited in Ishwar Singh; Habeeb Mohammad and Manjit Singh, held that failure to

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examine material witness would be fatal to prosecution case. Applying this principle, the above circumstance has to be held against complainant in this case.

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Learned counsel for accused has urged two more circumstances about Ex.P.1-cheque. The first one is the overwriting in date column where ‘19….’ is over written as ‘2009’, to suggest that cheque was issued prior to year 2000. Second one is that the location of Bank is mentioned as Bankapur, Dharwad. But, Haveri district was formed out of Dharwad District in 2001. Therefore, if cheque was of year 2009, Haveri should have been mentioned instead of Dharwad. However, as it has been the consistent case of complainant that the writings on cheque were as received from accused and in the absence of any evidence to the contrary, even the circumstance of use of different pen/ink for filling the particulars on the cheque cannot be held against the complainant.

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The various circumstances highlighted above, give rise to serious doubt about the transaction between

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complainant and accused. The trial Court on appreciation of the same arrived at a conclusion that there is failure of complainant to prove the transaction. The conclusions drawn are with reference to evidence on record and the same are neither perverse or suffer from material irregularity.

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In the result, I do not see any reason to interfere with the impugned judgment passed by the trial Court. Accordingly, the appeal is dismissed.

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SD/JUDGE

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CLK/BVK/HMB

Veerappa S/O Siddalingappa Hatti v. Rajashekhar S/O Gadigeppa Shettar

Case brief

What is this about?

What did the court decide?

Veerappa S/O Siddalingappa Hatti v. Rajashekhar S/O Gadigeppa Shettar

Case brief

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What did the court decide?

What the court decided

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Cases cited

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